The Network Entertainment SBU, which is rolling out a variety of outlets for IP, is recording favorable results in Japan and overseas with network content and home video games. In this issue of the newsletter, BANDAI NAMCO Entertainment Inc.’s President Satoshi Oshita discusses the situation in the final year of the Mid-term Plan as well as future ambitions.

Would you discuss the situation in the Network Content business, which is recording favoratble results?

Oshita: In FY2017.3, core titles demonstrated their strong market positions in Japan and overseas, including DRAGON BALL Z DOKKANBATTLE, for which worldwide downloads surpassed 150 million, and THE IDOLM@STERCINDERELLA GIRLS STARLIGHT STAGE. In FY2018.3, we will continue to carefully develop core titles, with game play and operation that leverage abundant lineups of IP assets and their world-settings. In network content, accompanying rapid market expansion, we still have considerable potential for growth, especially overseas. At the same time, our markets undergo rapid change, and accordingly we must always work with a sense of urgency and speed. In China, where we have been implementing full-scale business development initiatives since FY2016.3, our business operations are making favorable progress. Moving forward, we will continue working to achieve further business growth, not only in Japan but also overseas.

Home video games are showing good results.

Oshita: In FY2017.3, titles such as DARK SOULS III and DRAGON BALL XENOVERSE2 recorded especially strong results in Europeand the Americas and made a contribution toour performance. One of the BANDAI NAMCOGroup’s strengths is the fact that we sell thesetypes of titles backed by strong IP as well aspopular titles from other companies that haveentrusted us with sales due to our strong overseasdistribution network.

In FY2018.3, we will implement worldwideroll-outs of major titles based on in-house IP— Tekken 7 (on sale from June) and Ace Combat7 (planned to be launched in 2018). We have leveraged our technical development capabilities so that both of these products feature clear graphics and high degrees of realism, so please look forward to their launch.

Despite the fact that they are played on different devices, home video games and network content are similar in the sense that they areboth purchased by game fans. Moving forward, I would like us to work to expand our overseas business as we address the expectations of fans around the world who are eagerly awaiting games from BANDAI NAMCO. On the other hand, the term “overseas” encompasses a wide range of countries and regions with differences in preferences regarding devices, IP, and games. Accordingly, I think we need to carefully consider the distinctive characteristics of each region and focus our initiatives.

What is the situation in the Amusement Facility business?

Oshita: In arcade game machines, conditions were difficult in FY2016.3, and this business recorded a loss, but we have reevaluated our systems and product lineups. In FY2017.3, we got off to a new start with a streamlined system and increased efficiency. As a result, the business was able to return to profitability.

From this year, in addition to conventional arcade game machines, we will utilize VR and will commence full-scale initiatives in gaming machines for casinos. I am confident that we are already an industry leader in terms of VR-related know-how. This summer we plan to open VR ZONE SHINJUKU, an entertainment facility using VR technologies, in Shinjuku, Tokyo. From April to October 2016, in Odaiba, Tokyo, we opened the VR ZONE Project i Can on a limited-time basis. Leveraging the know-how cultivated through that initiative, BANDAI NAMCO Entertainment Inc., BANDAI NAMCO Studio Inc., and NAMCO LIMITED are now working together with preparations to offer an unrivaled VR experience at the new facility. Please look forward to this opening.

In regard to gaming machines, we will start to introduce products this summer, centered on North America and starting with Las Vegas. First, we plan to roll out PAC-MAN VIDEOSLOT WILD EDITION, which is gaming content that we developed jointly with Ainsworth Game Technology Limited, a leading developer of gaming machines that is based on Australia. In addition, in arcade game machines, in cooperation with NAMCO, we will move forward with proposals of new products that leverage new approaches.

VR ZONE SHINJUKU, a VR entertainment facility

In April, the BANDAI NAMCO Entertainment established the LE Business Unit.

Oshita: We created this independent unit to handle live event planning and sales of goods. It was split off from the Content Licensing Unit, which handles licensing operations. Centered on the IDOLM@STER and Tales of... series of original IP, which originated with games, the new office will bolster our operations in such areas as live events and other events as well as sales of goods. Moving forward, we will expand the worlds of our IP.

The next Mid-term Plan will mark a step toward being a global company Continuing to take on challenges with a spirit of autonomy and independence

What types of strategies are under consideration for the next Mid-term Plan?

Oshita: The key phrase is “Taking the next step to grow from a Japanese company into a global company.” In this phrase, “step” refers to the next stage. We cannot make a jump directly to the next stage, so we will take the next step in that direction. Moving forward, we will work to steadily expand our business around the world. In the true sense of the word, a “global” company has a complementary business structure so that, for example, weaker results in Japan can be offset by stronger results in Europe and the Americas. We have made progress with the establishment of bases in overseas regions around the world and with the delegation of authority, and accordingly we will aim to establish a system in which each region earns more than half of its sales through independent operations.

What challenges are you confronting?

Oshita: The IP axis strategy that we are advancing is our largest point of differentiation from our competitors. As a result, we are making favorable progress with bolstering our overseas businesses, which is one of our growth strategies. In addition, in creating new businesses, which is another one of our growth strategies, we are still in the stage of planting seeds, and those seeds have not yet been sufficiently nurtured. This is an issue. In particular, the establishment of new businesses overseas is an urgent task. In addition to the creation and acquisition of IP originating overseas, we must also step up our efforts to take on the challenge of creating new business models that originate in overseas bases, which have the best grasp of local conditions. The increasing speed of the Internet will support the ongoing creation of new businesses in the future. While maintaining a sense of urgency and speed, we will need to continue to leverage business models that draw on the distinctive strengths of the BANDAI NAMCO Group.

Human resources development is also important.

Oshita: The extent to which human resources can be nurtured becomes an issue in full-scale overseas business initiatives. Of course, the IP axis strategy is an asset, but it is important to have human resources to implement the strategy. We are implementing initiatives with a focus on overseas development. For example, in network content, we are reinforcing collaboration with people responsible for networks at overseas bases and working to nurture human resources through personnel exchanges with Japan.

As the president of BANDAI NAMCO Entertainment, what expectations do you have of employees?

Oshita: I want everyone to remember that all of the work that we are doing now is linked to the mission and vision of the BANDAI NAMCO Group, which aims to become the world’s most inspiring entertainment group through the provision of “Dreams, Fun and Inspiration”. FY2018.3 will be an important year for preparations for the next Mid-term Plan. In conjunction with the start of that plan, we have determined the new values that employees of BANDAI NAMCO Entertainment should emphasize. These values have five components — First, have fun first; Take the next step; Expand your mind; Push your limits; and Show your appreciation. I have told our employees that I would like them to emphasize these values, and I would also like everyone to work to build a corporate culture in which each individual continues to Empower, Gain Momentum, and Accelerate Evolution with feelings of gratitude and politeness.

This article is an extract from the Newsletter, BANDAI NAMCO News, which was published in June, 2017 and partially re-edited.